How to Optimize Storage for Efficiency

Running a growing business across multiple locations means keeping operations smooth and efficient. Fulfilling orders quickly, maintaining accurate inventory and creating streamlined workflows all depend on how well your warehouse is organized. That’s where warehouse slotting steps in.

Warehouse slotting assigns products to the best possible locations within your storage space. It’s about matching items to spots based on factors like how often they move, their size or weight. The result? Faster picking, fewer mistakes and better use of your space.

For retailers juggling high SKU counts or selling across multiple channels, slotting isn’t just helpful—it’s how you stay ahead.

In this blog, we’ll go over everything you need to know about warehouse slotting:

What is warehouse slotting?

Slotting keeps things simple: products where they need to be, exactly when you need them. The result? Faster order fulfillment, fewer mistakes and smarter use of your storage space—all key to keeping customers happy.

But warehouse slotting is more than just arranging shelves neatly—it’s about making sure every product is stored where it’s easiest to access, fastest to pick and most efficient for your team. Slotting decisions rely on data like product size, weight, turnover rates and how often items are picked.

When done right, slotting transforms how a warehouse operates. It cuts down the time workers spend moving around, lowers labor costs and improves order accuracy. Plus, it helps create a safer, more organized space that’s ready to handle high-volume orders or sudden changes in demand.

How warehouse slotting works?

Let’s break it down into steps.

1. Warehouse slotting starts with taking a close look at your inventory. Each SKU (stock keeping unit) is analyzed based on its turnover rate, size, weight and any specific storage needs.
   Make sure you have this information stored centrally somewhere, like your POS.
2. The fastest moving products are slotted first. High turnover items are usually placed in easily accessible locations to cut down on picking time and handling.
3. Then, the rest of your inventory is categorized. Products are grouped based on how they move and what they require. Fast-moving items go near packing or shipping areas, while slower-moving or bulky products are stored farther back. Items with unique needs—like temperature control or seasonal relevance—are assigned to locations that suit their requirements.
4. Once your inventory is slotted, you can map out efficient picking paths. These paths are designed to reduce how far workers need to walk while retrieving items. By keeping frequently purchased products close together and organizing them along logical routes, you can eliminate unnecessary steps and speed up order fulfillment.

Slotting isn’t something you set and forget. It’s an ongoing process that depends on regularly reviewing sales data, seasonal trends and SKU performance. Adjustments keep your warehouse layout in sync with real demand, saving time and keeping operations running smoothly.

Benefits of effective warehouse slotting

Increased picking efficiency

When products are stored in the right spots, workers can grab them faster—no extra steps, no wasted time. High-demand items are kept within easy reach, cutting down on unnecessary movement. The result? More orders picked in less time and a noticeable boost in productivity. 

Reduced labor costs

Warehouse labor costs aren’t cheap, especially when your employees need to work overtime. Given that the Fair Labor Standards Act in the US mandates that most employees receive at least 1.5 times their regular pay for overtime, if warehouse employees can’t find products, it’ll cost you.

Less time spent walking means fewer hours needed to complete each order. By keeping inventory organized and strategically placed, your team can work smarter, not harder. Fewer wasted steps lead to lower labor costs without compromising speed or accuracy.

Improved warehouse space utilization

Slotting makes better use of your available space. Organizing inventory by size, weight and how often it moves ensures every inch of storage is used effectively. You can fit more products in the same area, which reduces clutter and delays the need for expensive expansions.

Faster order fulfillment

An optimized layout makes the picking, packing and shipping process run faster. Products are exactly where they need to be and picking paths are streamlined, so orders move out the door quicker. 

This speed keeps customers happy and ensures you’re ready for busy periods when order volumes climb. 

Enhanced safety

A well-organized warehouse is a safer one. Heavy or awkward items are stored at ergonomic heights to reduce strain and injuries. Clear pathways and logical layouts prevent accidents, making it easier for your team to work efficiently and stay safe.

Factors to consider for slotting optimization

Product demand

High demand products need to come first when planning your slotting strategy. 

Place them in locations that are easy to access, ideally near packing or shipping stations, so travel time is reduced and orders move out faster. Keep an eye on demand patterns—high-volume SKUs should always stay in prime spots.

Use reporting like Lightspeed Insights to track demand from multiple angles—sales by brand, category and type, what’s selling faster than before and more. Use that data to identify your high demand products.

SKU characteristics

Not all SKUs are the same, so their storage shouldn’t be either. Large or heavy items belong closer to the ground or near shipping docks to prevent unnecessary lifting. Fragile items need secure spaces out of high traffic areas to avoid damage during handling.

Order frequency and picking patterns

How often items are ordered—and in what combinations—matters. Group products that are frequently purchased together to streamline picking routes and cut down on extra steps. Analyzing past order data can help you design zones that make picking faster and reduce errors.

Seasonality and variability

Demand isn’t static, especially during peak seasons. Adjust your slotting plan ahead of time to handle seasonal spikes—like moving holiday products to high-visibility areas. When sales taper off, shift them back to make room for other priority items.

Ergonomics

Efficiency should never come at the cost of safety. Frequently picked products should be at waist level to minimize bending, stretching and the risk of injuries. Ergonomic placement not only protects workers but keeps them moving efficiently, making every shift more productive.

7 tips to improve warehouse slotting

1. Check your sales data to track demand

Analyze demand data regularly. Track SKU performance often—things like demand, turnover rates and order patterns. Use those insights to adjust slotting positions so your fastest-moving items stay in the most accessible spots. 

Instead of tracking that information manually, look to your POS system to do it for you. “Every week, and during the holidays every day, we do inventory transfers using the reorder quantities baked into Lightspeed,” says Andy Linn of Detroit-based gift store City Bird. “Our staff picks those items from the warehouse, it makes it really easy and intuitive and quick.”

2. Prioritize fast-moving items

Fast-moving SKUs belong near packing and shipping areas. Workers should spend as little time as possible retrieving these items. Fewer steps mean quicker order fulfillment and less physical strain on your team.

3. Implement automation and slotting software

Automation can take the guesswork out of slotting. Warehouse management systems (WMS) evaluate your data and suggest the best layouts, pick paths and inventory placements. It’s a faster, more precise way to organize your space while cutting down on human errors.

4. Re-slot regularly

Slotting isn’t a one and done task. As demand changes, new products come in or older SKUs are phased out, your layout needs to change as well. Otherwise, you’ll slowly but steadily lose the efficiency your original slotting exercise gained you.

Regular re-slotting ensures your warehouse stays efficient and ready to handle shifting priorities. 

5. Optimize picking paths

Picking paths should be straightforward and efficient. Group items that are commonly ordered together and arrange zones to eliminate unnecessary steps. Create a map of your warehouse with ideal picking paths for various product types and post it throughout the facility so even new employees can follow the optimal paths.

6. Conduct slotting audits

Walk through your slotting setup periodically to find weak spots. Check key metrics like pick times, error rates and travel distances. Consult with employees for any pain points they notice that you might miss on a single walkthrough. These audits help you pinpoint areas for improvement and make changes where they’re needed most.

7. Train your team

Even the best slotting strategy falls apart if your team doesn’t understand it. Take time to train workers on the logic behind the layout and how it improves their workflow. When your team knows the why, they’ll execute the how more effectively.

Challenges in warehouse slotting

While these challenges are significant, they’re not insurmountable. Strategies like using data to guide decisions, investing in warehouse tools and engaging your team can help. 

SKU proliferation

An ever-growing number of SKUs (stock keeping units) can quickly complicate the layout of a warehouse. As businesses expand product lines to keep up with customer demand, keeping everything organized becomes harder. Without regular updates, SKU proliferation leads to inefficient workflows and longer picking times.

How to handle SKU proliferation

• Categorize SKUs based on popularity (A = high, B = medium, C = low) and allocate prime locations accordingly. High-demand items should be easily accessible.
• Conduct periodic reviews of your warehouse layout to identify underutilized space and adjust SKU placement as needed.
• Utilize a WMS to analyze data for the most efficient SKU placements.

Seasonal demand fluctuations

Seasonal demand shifts can throw a wrench into even the best warehouse layouts. High-demand items need prime spots during peak periods, but those same spots must be reassigned when demand cools. Balancing smooth operations during both busy and slower seasons is no small task.

What do do about seasonal fluctuations

• Develop a slotting plan that can be easily adjusted based on seasonal demand. Use temporary storage locations or adjustable racking systems.
• Use historical sales data and market trends to forecast seasonal demand and proactively adjust your warehouse layout.

Space limitations

Overcrowded or small warehouses often struggle to make slotting work. Limited space forces compromises—like storing items in less-than-ideal locations—which slows down picking and replenishment. Using the available space efficiently requires detailed planning and, sometimes, creative solutions.

How to handle space constraints

• Utilize vertical space by installing multi-level racking systems or mezzanines.
• Implement compact storage methods like narrow aisle racking or automated storage and retrieval systems (AS/RS).

Worker training

New slotting systems mean employees need to learn updated processes—and fast. Without proper training, inventory can be misplaced, picking routes ignored or errors increased. Clear communication and consistent training are key to making sure your team adapts without disrupting operations.

How to train employees on your slotting system

• Provide practical, hands-on training that allows employees to practice using the new slotting system in a simulated environment.
• Use visual aids like maps, diagrams and color-coded labels to help employees understand the new layout and SKU locations.
• Conduct regular refresher training sessions to reinforce key concepts and address any questions or concerns.
• Designate a point person or team to provide ongoing support and answer employee questions as they arise.

For more ideas on how to tackle these challenges, check out warehouse slotting articles, efficient slotting strategies or slotting tips.

Optimize your warehouse with a slotting system

Warehouse slotting isn’t just about tidying up inventory—it’s about creating a system that works smarter. Placing products in the right spots based on how often they’re picked, their size or even the season makes every inch of your warehouse more efficient. Every shelf and pathway are optimized to save time, reduce errors and keep operations running smoothly.

Operating an efficient warehouse is easier when your POS centralizes your business. Talk to an expert to see how you can streamline your operations with Lightspeed.

FAQs

Why is warehouse slotting important?

Warehouse slotting is important because it streamlines operations and cuts costs. Placing products in the right spots—based on demand, size or how often they’re picked—reduces travel time, speeds up order fulfillment and lowers labor expenses. It also makes better use of storage space and keeps the warehouse safer by ensuring items are stored in accessible, logical locations.

How often should warehouse slotting be updated?

Slotting updates should happen regularly to keep up with changing demand, inventory turnover and seasonal shifts. Most businesses find quarterly or semi-annual updates work well, but fast-moving industries or those with frequent new products may need monthly reviews. Keeping layouts current ensures the warehouse runs efficiently and adapts to what’s happening in real time.

Can automation improve warehouse slotting?

Yes, automation can make warehouse slotting much more efficient. Tools like warehouse management systems (WMS) or slotting software analyze SKU data and recommend optimal layouts, from product placement to picking routes. They save time, minimize errors and make it easier to adjust quickly when demand or inventory changes.